A general introduction to China’s energy regulations and markets

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In the context of global climate change, in September 2020, China, as a major force in the energy revolution, set clear goals to peak the country’s carbon emissions by 2030 and become carbon neutral by 2060. Guided by these goals, the production of new energy, playing an important role in the construction of new power systems, has become an important direction in the transformation and development of low-emission energy.

In recent years, China’s new energy industry has made continuous breakthroughs in various aspects such as installed capacity, power generation rate, power generation costs, etc. By the end of 2022, the installed capacity of wind farms in the Chinese mainland has reached 365 million kilowatts, solar power has reached 393 million kilowatts, and the biomass power reached 41 million kilowatts. Including conventional hydropower and pumped storage, renewable energy installed capacity reached 1.213 billion kilowatts, which exceeds the capacity of coal-fired power plants and accounts for 47.3% of the country’s total installed generation capacity. At the same time, the share of new energy generation is constantly increasing and its cost is falling rapidly, which has entered a new stage of affordable and subsidy-free development.

In 2022, China’s new energy industry continued to develop rapidly. According to the 2022 national power sector statistics released by the National Energy Administration, China’s new wind and photovoltaic power generation capacity exceeded 120 million kilowatts, reaching a peak of 125 million kilowatts, and exceeded 100 million kilowatts for three consecutive years, setting a new record. The total annual installed capacity of renewable energy sources increased by 152 million kilowatts, accounting for 76.2 percent of the country’s newly installed power generation capacity, and became the main part of China’s new installed power generation capacity. At the same time, the construction of large-scale wind and photovoltaic energy bases in deserts such as the Gobi and arid regions is progressing well, and the construction of pumped storage and other energy storage projects has accelerated significantly. New models and new formats are constantly emerging, such as photovoltaic sand control, agricultural photovoltaics and renewable hydrogen energy production. Distributed development has become the main form of new wind power and photovoltaic development – 51.11 million kilowatts of new distributed photovoltaic capacity will be installed in 2022, accounting for more than 58% of the new installed photovoltaic capacity this year.

Installed capacity of wind and photovoltaic power plants in China in 2017–2022

New installed energy capacity in China has been ranked first in the world for many years. The scale of installed wind and photovoltaic generation represents more than one-third of the world’s installed generation capacity. The wind energy industry chain in China is complete, and many wind turbine manufacturers, such as Goldwind and Envision Energy, are at the forefront of the global industry. The photovoltaic industry also dominates around the world. By the end of 2021, China produced 79% of polysilicon – key components of photovoltaic power generation devices – produced globally, as well as 97% of wafers, 88% of cells and 82% of modules.

In 2022, the center of the global new energy industry has moved further to China. Key components such as photovoltaic modules, wind turbines and gears made in China accounted for 70 percent of the global market share. At the same time, the development of renewable energy in China has positively contributed to reducing emissions around the world. In 2022, China’s renewable energy production saved about 2.26 billion metric tons of domestic carbon dioxide emissions, and its exported wind energy and photovoltaic products reduced other countries’ carbon dioxide emissions by about 573 million metric tons. In total, China was responsible for a total emissions reduction of 2.83 billion metric tons, accounting for about 41 percent of global carbon dioxide emissions reductions over the same period. China has thus become an active participant and important contributor to the global response to climate change.

According to the 14th Five-Year Renewable Energy Development Plan issued by the Chinese government, the share of energy consumption from non-fossil fuels will increase to approximately 20 percent by 2025. By 2030, the combined installed capacity of wind and solar energy production will exceed 1.2 billion kilowatts. In 2035, the share of non-fossil energy consumption is expected to continue to increase significantly, reaching 25% in 2030, and wind power, photovoltaics and other new energy sources will become the main energy sources in China.